We are now accepting clients for the U.S. 2013 Season (Calendar Year 2014). We will be sending out engagement letters in January 2014. If you wish to be placed on our list please send an email to the office.
Upcoming Exclusion levels:
2013 FEIE: $97,600
2014 FEIE: $99,200
Please note that the deadline has passed to request a December extension.
15 Dec 2013- Deadline for Individuals residing abroad with extension in place.
Effective July 1, 2013 it is now mandatory to file the FBAR electronically. Follow this link for instructions:
Overview of Current IRS Programs for Offshore Disclosure:
Estimated Tax Payments:
U.S. Taxes are due in four quarters as you earn the money. Don't make the mistake of not making estimated payments.
For income earned during the first quarter of 2013, the payment is due April 15th, 2013. The next quarter due is Jan 15th, 2014. It starts all over again April 15th 2014 with ES-2014.
Brief Word About Singapore Taxes:
Singapore taxes are paid in arrears. You must file your return online at www.iras.gov.sg but you will not be billed until 3-6 months later. This bill is called your Notice of Assessment (NOA). Singapore is currently in Year of Assessment 2013 but the tax assessment is for income earned in the year 2012. They do not generally withhold.
Other Useful Information:
Our office is an authorized IRS E-Filer, but not all returns qualify. E-filing is now mandatory for returns that do qualify.
There is a general misconception about the Foreign Earned Income and Housing Exclusions. You must file your 1040 and report the income to exclude it. If you have not filed, and the IRS notices you first you can lose the ability to exclude your income.
Singapore has lower tax rates than the United States. www.iras.gov.sg. If you earn over the exclusion you will likely still have a US tax obligation even with foreign tax credits. Other countries in the region have higher taxes so you can expect to owe little to no US tax if you are working in Australia or China, for example but you should discuss your situation with a tax professional. Often the mistake is made to claim the FEIE when in fact it would benefit the taxpayer not to.
Foreign Account Tax Compliance Act of 2009 (FATCA): Form 8938
On March 18, 2010 the final version of FATCA became law as a part of the HIRE Act. Much of FATCA's regulations are directed towards forcing foreign banks to disclose information to the US authorities, but the impact on the American expatriate community (while arguably not FATCA's intended targets) is significant. FATCA increases the penalties and extends the statute of limitations for those with underreported foreign passive income and imposes an additional reporting requirement of foreign financial assets in Section 511 that is codified at section 6038D. Those with such "specified foreign financial assets" must report, as part of the tax return, information on the accounts if the aggregate balance equals or exceeds a certain thresholds.
FBAR TDF 90-22.1: As a reminder, the FBAR must now be filed electronically. Please register at this link: https://bsaefiling1.fincen.treas.gov/P. You need to go back and review your statements to find the highest daily balances of each foreign account. If you are a PR of Singapore, you also will need to report your interest and the high balance on your CPF account. Also, don't forget to report the interest paid by these foreign accounts on your Schedule B. See below for more information on this form. Ignored for decades, the IRS seems quite serious about it now. Do a Google search for information dated 2008 and later. An informative article can be found in the June-July 2008 edition of the Journal of Tax Practice & Procedure. You can also find good information in a publication put together by OffShore Press. (Google it). Please note that the form was further modified in October 2008, so for the most up to date information you'll have to refine your search even further. (Then you'll need to refer to the IRS website to get the revised definition of US Person.)
Hiring the Right Tax Professional
The United States tax code, specifically in its treatment of foreign-earned income, is complex and confounding to the untrained tax preparer. You need a tax preparer conversant with the current tax code and trends that specifically effect , American citizens living abroad, permanent residents of the U.S., U.S. military stationed abroad, and others with U.S.-connected income.
You could be overpaying or underpaying your taxes if you aren't careful. If you are a first-time overseas filer, this is especially true as there are many special time tests and first year elections that will affect your future tax filings.
Don't let your accountant from home guess his way through your taxes. Hire a preparer with expertise in these types of returns. If you aren't sure, ask your previous tax preparer if they have experience with forms 2555 and 1116. If they say no, you should not pay them to prepare your taxes. It just makes the most sense to have an expat tax preparer prepare your expat taxes. If you typically self-file, ask yourself if you are willing to devote the time to learn.
If you have foreign insurance policies, foreign investments, or are involved with a foreign business or foreign trust you should seek a preparer with a legal background. You should question them about their abilities to prepare and advise on forms 8621, 720, 5471, 3520, and 3520-A.
It is illegal for someone to accept payment for preparing returns and not sign the return.
Companies offering complex services for a few hundred dollars may not be doing you any favors.
Let us take the guess work out of your tax returns. Our preparers are licensed professionals.
Highlights of Our Services:
Downloads: Please contact us via email before submitting these forms.
Returning Clients should contact our office for their customized Checklist.
TIGTA: U.S. Treasury Inspector General for Tax
DOJ: U.S. Departmen tof Justice Tax Division.
Most recent indictments relating to foreign income & disclosure of accounts.
As the taxpayer you are responsible for the contents of your filed return. Before you sign your return you should be able to review it with your tax preparer. If they are unwilling to do so, you should take your work elsewhere. Pay attention to the details. For example, Schedule B has a yes/no block asking if you have foreign bank accounts. Be sure you have answered this question appropriately. It is your responsibility even if your returns are prepared by a third party.
There are new preparer penalties and disclosures required by the IRS. For this reason, you may be asked to provide more substantiation of your information and to sign more documents at the beginning of your engagement. Please be sure to keep accurate records for seven years in the event you are called upon to furnish the source documents. This includes all your bank statements from your foreign banks.
Singapore the new Switzerland:
On September 22, 2010 the NY Times Global ran an article entitled Bank Secrecy in Asia. In this article they suggest that the 800 new IRS agents will be assigned to target HK and Singapore. Try a google search to find it.
You should be very concerned if you have undisclosed assets/accounts in Hong Kong and/or Singapore. Contact our office for direction on how to proceed. We can set up a meeting with a tax attorney for you to discuss your case in greater detail.
Treasury Inspector General (TIGTA) finds 10% of Foreign Earned Income Exclusions claimed in 2008 are invalid. Click here to read the report.
FBAR Related Court Cases:
United States v. J. Bryan Williams; No. 1:09-cv-00437
Court says Government failed to establish that taxpayer “willfully” concealed offshore accounts.
Military Filers should review the IRS website for important information, including information on free filing assistance.